Australian consumer confidence fell last week, keeping with the wild swings seen for much of the past year.

The ANZ-Roy Morgan consumer confidence index fell 2.2% to 117.9, partially unwinding the strong gain seen in the previous week.

Despite the decline, the index remains above its long-run average of 112.8.

Confidence is higher than normal in other words.

The survey’s 4-week moving average, perceived to be a better overall guide as to the trend in confidence levels, reflects this view, currently sitting at 118.0.

“Consumer confidence remains volatile,” said Felicity Emmett, head of Australian economics at the ANZ. “But looking past the weekly ups and downs, the four week average has been on the rise since early 2016 and remains well above its long run average.”

According to ANZ, the fall in the headline index was broad-based with all of the five subindices that make up the index weakening over the week.

“Households were also less optimistic about the economic outlook. Views toward the 12-month and 5-year economic outlook slipped 2.1% and 1.4% respectively.

“Household views on whether ‘now is a good time to buy a household item’ fell a solid 3.8%,” she added.

Despite sitting at elevated levels, particularly views on finances which have been assisted by higher house prices and reasonable labour market conditions, Emmett notes that this has yet to translate to higher household spending, making this week’s Australian retail sales report for August all the more important.

“This optimism has not been reflected in consumer spending of late,” notes Emmett.

“Retail sales have been soft, and overall consumer spending growth stepped down in Q2.

“On this front, we’ll be watching this week’s read on August retail sales to give us an idea as to whether the recent strength in confidence has translated into stronger spending.”